Gov. Beverly Perdue's approval rating has been in free fall since she took office, recently dropping to a new low of 30%, As low as that is one can expect her approval to plummet further with her signing of the budget last Friday. The final budget deal, approved 38 days past deadline, will result in $1 billion in new taxes on North Carolinians in the middle of the state's greatest economic downturn in a generation.
Upon signing the bill Gov. Perdue stated that she "would not have signed a bill that did a broad-based income tax on working families." However the Governor conveniently ignores the fact that the budget contains a one point, 14.8% sales tax hike that, much like an accross the board income tax hike, is a broad-based tax increase that will hit all North Carolina working families.
The North Carolina budget will exacerbate the state's unemployment problem, which recently broke 11% and is the 5th highest in the nation. Prior to the latest budget, North Carolina had the worst business tax climate in the region. With a 3% corporate income tax surcharge included in the final budget, neighboring states will look even more attractive to employers.
By imposing this surtax on corporate income, Gov. Perdue and legislative Democrats fail to recognize that ordinary workers, not big corporations, bear the burden of higher corporate taxes. As ATR has previously pointed out, there’s an emerging consensus among economists that at least $0.60 out of every $1.00 the corporate income tax collects is paid in the form of lower wages. Furthermore, corporations are owned by the millions of 401(k) owners, IRA owners, pension plans, and individual shareholders who buy and hold corporate stock. A majority of adults are part of this “shareholder majority.” At the end of the day, when corporate taxes rise and after-tax profits subsequently decline, the retirement plans of North Carolina residents take a hit.
Other ill-advised tax increases in the final budget include the Amazon tax, a tax on digital downloads, a personal income surtax, and tax increases on alcohol and tobacco.
The 2009 legislative session should make one fact very clear to all North Carolinians: as long as both chambers of the legislature and the governor's mansion remain controlled by Democrats with a penchant for tax hikes, the debate at the capitol will always be over what taxes will go up, not whether they should go up.
The following legislators, in voting for the final budget, broke their Pledge to constituents to oppose any and all efforts to raise taxes: